DouYu International Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
December 7, 2023

There are 5 speakers on the call.

Operator

Good morning and good evening, ladies and gentlemen. Thank you, and welcome to Douyu International Holdings Limited Third Quarter 2023 Earnings Conference Call. At this time, all participants are in listen only mode. We will be hosting a question and answer session after management's prepared remarks. I will now turn the call over to the first speaker today, Ms.

Operator

Lingwen Kong, IR Director at Douyu. Please go ahead, ma'am.

Speaker 1

Thank you. Hello, everyone. Welcome to our Q3 2023 earnings call. Joining us today are Mr. Ming Xu, Chief Strategy Officer and Mr.

Speaker 1

Hao Cao, Vice President of Finance from Interim Management Committee. You can refer to our Q3 20 23 financial results on our IR website at ir. Deyu.com. You can also check a replay of this call when it becomes available in a few hours on our IR website. Before we start, please note that this call may contain forward looking statements made pursuant to Safe Harbor provision for the Private Securities Litigation Reform Act of 1995.

Speaker 1

These forward looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward looking statements. All forward looking statements expressly qualified in their entirety by the cautionary statement, risk factors and details of the company's filings with the SEC. The company undertakes no duty to revise or update any forward looking statements for selected events or circumstances after the date of this conference call. Before I provide an update on our business performance for the Q3 of 2023, on behalf of management, I would like to briefly address the recent situation concerning Mr. Xiaodie Chen.

Speaker 1

As announced, Douyu has formed an interim management committee to manage the company's operations until further notice. I will now speak on behalf of our Interim Management Committee on business update. And the call will be handed to our Vice President of Finance, Mr. Hao Cao for financial discussion. In the Q3 of 2023, we diligently executed and optimized our corporate growth strategy, steadily advancing our business.

Speaker 1

For the quarter, our mobile MAUs were 51,700,000, quarterly average paying users were 3,900,000 and our adjusted net profit was RMB71,900,000. During the summer peak season, the 3rd quarter was marked by a rising official gaming event, derivative self produced content and promotions for new game launches. This provided meaningful catalyst for our momentum in attracting new users and invigorating existing ones. We elevated user engagement and user intention through our premium content offerings and product features. Secondly, we continue to deepen our cooperation with game developers, scaling up promotions for new games and consistently introduce a variety of program operations.

Speaker 1

In addition, we continue to conduct internal supervision as normal with our commitment to fostering a compliant harmonious and healthy life journey environment. With this continuous optimization to our ecosystem that houses our game centric community, our overall profitability has improved. Let's take a closer look at our business operations during the Q3. In the Q3, our mobile MAUs were RMB51.7 million, slightly up quarter over quarter despite a decrease of 9.5% year over year, which was mainly attributable to the fine tuning of our user acquisition strategy. Starting in early 2023, we began emphasizing user quality and cut back on low ROI marketing spending, greatly reducing customer acquisition expenses.

Speaker 1

On a year over year basis, this led to a lack of user acquisition from promotional channels and a decline in MAUs. Quarter over quarter, on the other hand, our MAUs increased, which we attribute to 2 primary factors. First, we broadcast these multiple mainstream Esports summer tournaments and co stream the tournament events, fully capitalizing on the seasonality of the peak summer season. 2nd, our premium content and programs are paying initiatives for revenue generating products and promotion for the launch of new games all contributed to an influx of new users and reengagement with our existing users. We have long adhered to a content driven approach to user growth, consistently attracting and retaining high quality users by delivering top tier content with a particular spotlight on esports.

Speaker 1

Moving to our content ecosystem. This quarter, we continue to enhance our diversified tournament system, broadcasting over 50 large scale official gaming events, including the League of Legends Pro League Summer Split, King Pro League, Dot 2 Bali Major and Riyadh Masters as well as the Valorant Champions. We roll out an area of derivative programs and activities the official gaming event, including the co streamed live commentary featuring star streamers as well as post game review programs. Thanks to this derivative and their diverse discussion topics, we've got to further engage some users initially joined to the official gaming event, giving an extra boost to user activity. During the quarter, we produced nearly 80 Esports tournaments.

Speaker 1

During the downtime between official gaming events, we strategically launched high engagement self produced tournaments that garnered an enthusiastic response. This included pre match activities for the official LPL, commentator and host championship, the Douyu Honor Cup S6, the Douyu Classifier Legend Cup and the Royal Public Board Koi Cup. Keeping users actively engaged in our game segments with best in class off scene offerings. Capitalizing on the prime opportunities represented by the summer peak season, we took our cooperation with game developers to the next level, achieving favorable outcomes in both the operation of games that we already covered and the promotion of new ones. Aggie Party has been a standout success this year.

Speaker 1

In partnership with its developer, we launched the EpiGo, a premier PGC variety show featuring Epiparty. From the initial video additions to the latter mentor led group competition, all the way to the final round of in person finals, We played an instrumental role in seamlessly integrating entertainment elements into the gaming experience, showcasing both the highly interactive nature and the co allure of Aggie Party. In the meantime, along the program, we initiated a theory of community operations and incentives for streamers in the Aggie Party segment, successfully gaining traction among both new and existing users and fortifying overall user segments. This type of highly popular, high quality content facilitates core promotion and synergy between our platform and gamers, increasing user penetration on both fronts and ultimately benefiting all stakeholders. In the Q3, our focus for new game promotions centered on Wallet Ranch And the appeal of this competitive and highly entertaining game was maximized through engaging live streaming, driven by a combination of official gaming events and self produced tournaments, Walaren has since its launch consistently secured our spot on GoE's 12 20 games list.

Speaker 1

Additionally, for the promotion of new game Lost Art, we invited special guests and platform streamers to conduct exclusive live forecasts on the public release day, gathering widespread attention both within and outside the platform. Our sophisticated content operations not only boosted the visibility and the permanence of the new game itself, but also importantly underscores so usability to consistently deliver premium content, leaving a lasting impression on gamers. Let's turn to our monetization strategies. Our total number of paying users in the Q3 was 3,900,000. The year over year change in the number of paying users is mainly due to 2 reasons.

Speaker 1

1st, as we executed our strategy to foster a healthy sustainable game centric community ecosystem, we reduced the sum of our revenue generating actions intended to boost activity on the platform, including discontinuing marketing activities aimed at attracting new paying users. 2nd, on the revenue side, we improved our operating efficiency by scaling down low margin marketing activities. The challenging macro landscape has to a certain extent make users less willing to spend, resulting in a reduction in the number of paying users. As we continue to maintain our core paying users, given the existing market situation, we offer some modestly priced revenue generating products to accommodate the spending habits of mid and long tail users. Therefore, our quarterly ARPU marginally declined year over year and quarter over quarter to RMB306.

Speaker 1

Apart from revenue generated from traditional virtual gifting, our membership business also achieved solid growth momentum, While continuously upgrading membership functions and benefits, we advanced our membership system with a rich collection of activities and kept our core paying user base stable. For example, based on our members' long term spending habits, In addition to the existing special reminder for member anniversaries, we introduced anniversary celebration features such as the Moments in Time photo album to any members who's been with Douyu for 1 year or more, representing the members memorable moments spent with streamers, positively strengthened in this connection between streamers and users. In general, we have effectively attended to and retained whole paying users across the platform. And our membership renew rate has steadily increased over several consecutive quarters. Regarding product R and D and functionality innovation, in the 3rd quarter, we have been continuously refining our healthy content ecosystem and improving the operating efficiency of relevant business segments empowered by technology upgrades.

Speaker 1

Firstly, on content review and approval, we fortified our tech base, content monitoring and identification, increasing the accuracy of system reviews, while expanding the scope of these reviews. This enhancement effectively ease the burden of manual review and resulted in an overall improvement in the efficiency of our content moderation. Secondly, our content first function has been greatly enhanced. As we add more game categories and new games to our lineup, the streamers in our game segments have been become increasingly inclined to cover more than just one specific game during live stream. Our in house team harnessed deep learning technology and developed a search solution for game segments, which quickly proves live streaming channels covering the same gaming content into the relevant game segment.

Speaker 1

The solution has elevated content visibility, made it easier for users to find their desired content. The solution gives a desired content and improved overall content utilization efficiency. Crucially, accurate identification of content covered by each live streaming channel forms the foundation of sufficient content recommendation and distribution, which in turn empowers us to provide users with more precise personalized recommendations. In conclusion, we believe that we remain firmly committed to fostering a vibrant, diverse game centric content ecosystem with a steadfast focus on long term sustainable growth, while upholding regulatory compliance. Recently, it has to the come to the knowledge of the company that there have been investigations with regard to historical activities of certain streamers on the company's platform.

Speaker 1

Till now, the company's operations remain normal and the investigation have not had any material adverse impact on the company's operations. We will monitor the situation closely and provide timely disclosures as necessary. We would like to emphasize that our platform is formally committed to legal compliance and we will take necessary measures against any illegal activity, which is in violation of the rules and policies of our platform. As we have observed the presence of misinformation circulating online, we would strongly recommend that all stakeholders remain informed by following the press release issued by the company for accurate information regarding this investigation and the company's related actions. We will continue to make every effort to build a healthy diversified game centric ecosystem for our users and streamers.

Speaker 1

With that, I will now turn the call over to our Vice President of Finance, Mr. Hao Cao, to go through the details of our financial performance in the quarter.

Speaker 2

Thank you, Lin Lin. Hello, everyone. In the Q3, against the challenging macroeconomic environment, we maintained a stable financial performance by executing efficient operational strategies such as adopting a flexible pricing mechanism for revenue generating products and further optimizing content costs. Together with our ongoing effective cost control measures, our adjusted net profit has achieved stable growth for the 3rd consecutive quarter. Now let's take a look at our financial performance in more detail.

Speaker 2

Total net revenues in the Q3 of 2023 decreased by 24.4% year over year to RMB1.36 billion. Live streaming revenues were RMB1.15 billion, a decrease of 32.5 percent from RMB1.71 billion in the same period of 2022. The decrease was primarily due to the soft macroeconomic condition, which impacted the spending awareness of some new and price sensitive paying users. Coupled with a smaller user base, resulting from our strategically decreased marketing spending, the number of total paying users decreased year over year. In response to the soft consumer sentiment, we provided lower priced revenue products to sustain spending habits among mid- to long tail paying users, which resulted in a decrease in quarterly ARP.

Speaker 2

Our quarterly up was RMB306, down 4% from RMB319 in the same period last year. Advertising and other revenues were RMB208 point 2 million, an increase of 123.2 percent from RMB 93.3 million in the same period of 2022. The year over year increase was primarily driven by the increase in other revenues generated through our other innovative businesses. Cost of revenues in the Q3 of 2023 was RMB1.17 billion, a decrease of 24.6% compared with RMB1.55 billion in the same period of 2022. Revenue sharing fees and accounting costs decreased by 29.7 percent to RMB 0.93 billion from RMB 1.32 billion in the same period of 2022.

Speaker 2

The decrease was mainly driven by 2 factors: 1st, the decrease in revenue churn fees, which was mainly aligned with decreased live streaming revenues second, the decrease in content costs, which was primarily attributable to improved cost management in our self produced content and streamer payments. However, this decrease was partially offset by higher copyright costs due to the acquisition of LPL, tournament rights. Earnings costs in the Q3 of 2023 decreased by 21.4% to RMB106.1 million from RMB135 1,000,000 in the same period of 2022. The decline was primarily due to our effective bandwidth cost control measures. Gross profit in the Q3 of 2023 was RMB192.4 million compared with RMB251.2 million in the same period of 2022.

Speaker 2

The decline in gross profit was primarily attributable to decreased live streaming revenues and increased other costs. The increase in other costs was largely in line with the increase in other revenues. Gross margin in the Q3 of 2023 was 14.2% compared with 14% in the same period of 2022. Sales and marketing expenses in the Q3 of 2023 were RMB90 1,000,000, a significant decrease of 44.5 percent from RMB162.1 million in the same period of 2022. This was mainly attributable to a decrease in marketing expenses for user acquisition.

Speaker 2

Research and development expenses in Q3 of 2023 were RMB74.5 million, representing an 11.7 percent decrease from RMB84.4 million in the same period of 2022. This decrease was primarily due to a decrease in personnel related expenses. General and administrative expenses in the Q3 of 2023 were RMB51 1,000,000, a drop of 2.5% from RMB52.3 million in the same period of 2022. Loss from operations narrowed to RMB8.8 million in the Q3 of 2023 from RMB11.1 million in the same period of 2022. Net income in the Q3 of 2023 was RMB76.4 million compared with a net loss of RMB6.6 million in the same period of 2022.

Speaker 2

Adjusted net income, which excludes share based compensation expenses, The share of income or loss in equity method investments, gain on disposal of investment and impairment loss of investments was RMB71.9 million in the Q3 of 2023 compared with RMB25.7 million in the same period of 2022. For the Q3 of 2023, basic and diluted net income per ADS were both RMB0.24, while adjusted basic and diluted net income per ADS were both RMB0.22. As of September 30, 2023, the company had cash and cash equivalents, restricted cash and short term and long term bank deposits of RMB7.14 billion compared with RMB6.81 6.81000000000 as of December 31, 2022. Going forward, we are committed to supporting the sustainable growth of our platform. As we faced short term macro challenges, our goal is to improve efficiency of our core business, while actively exploring new business opportunities to enhance our revenue generation capabilities.

Speaker 2

We will continue to manage our costs and expenses with prudence to further increase our earnings. This multi faceted strategy will help stabilize our financial profile and fortify our platform's long term profitability, ensuring that we not only weather macro headwinds, but also strive in evolving gaming content industry landscape. This concludes our prepared remarks for today. Operator, we are now ready to take questions.

Operator

Thank you. We will now begin the question and answer session. Our first question comes from Thomas Chong with Jefferies. Please go ahead.

Speaker 3

Thanks management for taking my questions. My question is really about the macro, how the macro environment will affect the game broadcasting sector? And how would that affect our operations? Thank you. Thank you for your question.

Speaker 3

Over the past 3 years, the environment in the domestic game live streaming industry has been in a state of very urgent. From the macro perspective, policies and market and the overall economic environment are all essential factors to consider. Firstly, the live streaming industry has entered a stage of regular supervision, continual deeper and stronger requirements are being implemented for content review, compliance operations, etcetera. Our goal is the long term healthy development of the platform and actively cooperating with regulatory authorities. As always, we are committed to fulfilling the platform's regulatory responsibilities.

Speaker 3

We will continually strengthen our compliance programs and regulate our operations across the platform with regular internal supervision, managing in appropriate live streamers and the user irregularities. We will also continue to optimize the content ecosystem and increase our investment in high quality tournaments and programs that infuse positivity and the quality content throughout our platform. This combined effort aim to foster harmonious and healthy live streaming environment. Next, from the perspective of the game market. Game publishing has gradually resumed this year.

Speaker 3

The diversity of games and the users' needs and the consumption habits for games are constantly changing, which brings more opportunities to our platform operations as an established platform in the game live streaming industry. Though it's continually upgrading and innovating our content operations and commercialization models. For example, new game promotions have shifted away from large scale channel related user acquisition to promotions that rely on a significant increase in content acquisition. This change benefits our content creation and operations based on game characteristics. For example, in terms of content consumption, we have been exploring commercialization models beyond virtual gifting over the past 2 years.

Speaker 3

Among these, the game membership business derived from our platforms content and associated games has shown good growth trends. In addition, the economic cycle also affects our commercialization strategies, especially in today's relatively weak economic environment. Users disposable income for entertainment related consumption is decreasing. Since June of this year, we have seen a decline trend in mid tier users willingness to pay. With this shift, we started offering some modestly priced revenue generating products and set up fan operation activities with low entry requirements.

Speaker 3

These price adjustments and operations have helped us maintain paying users' payment habits and the overall size of our paying user base. In the short term, we believe that the economic cycle will be the most important factor affecting the company's operating performance. With the influence of these macro factors, Zohu faces both challenges and opportunities. We are prioritizing long term sustainable development with an eye toward profitability. Our focus has been on stabilizing our traditional business fundamentals and optimizing our operational efficiency, primarily through adjustments to our marketing strategies and the cost optimizations.

Speaker 3

As a result, the company's adjusted profitability has significantly improved. Now that we have stabilized our financial position, we have more flexibility to invest company resources toward exploring new business, actively building and improving our platform's gaming community and expanding our growth opportunity. Thank you. Please, next question.

Operator

Our next question comes from Derek Cai with Morgan Stanley. Please go ahead.

Speaker 4

This is Derek from Morgan Stanley. Thanks management for the time. Could you share a little bit more on the progress of the innovative business in terms of the launch of the new games? How would them improve the number of paying users and revenue? Thanks.

Speaker 2

Thank you for your question. In addition to the traditional virtual gifting business model, we are also leveraging our advantage in game centric content operations to further explore new sustainable revenue streams. So far, among the numerous innovative businesses we have looked into, the membership business has shown the strongest growth momentum, while also promoting a diverse and sustainable revenue stream. Since early 2022, we have continuously improved and promoted platform wide membership system, iterated membership functions and upgraded membership benefits to enhance the companion attributes of our products and strengthen interactions between streamers and members. All of these target strong stronger attention among our core paying users and our membership renewal rate has been steadily rising for several consecutive quarters.

Speaker 2

Beginning in the second half of twenty twenty two, we designed and rolled out membership services that are more closely related to games. Through our deep cooperation with game developers, we were able to meet gamers' demand for in game items. Our game specific membership service is well aligned with platform gaming content and is both attracting new users and expanding our revenue streams. Apart from the membership business, several other innovative businesses and the development have shown promising prospects and started contributing to our revenue. These innovative businesses remain relatively small in scale and we are still evaluating their development trends and stability.

Speaker 2

We look forward to providing appropriate updates when they become more viable. Overall, due to the high proportion of revenue generated from live streaming, our innovative businesses' growth rates currently have a fairly limited impact on paying users and revenue scale. Our virtual gifting business, on the other hand, comprises a significant portion of our revenue. Over the past 2 years, we have made a series of adjustments to our virtual gifting business, such as lowering the frequency of revenue generating operations and reducing low ROI activities. These adjustments were partly based on changes in the macro environment and partly on the changes in our operational priorities.

Speaker 2

Both were aimed at achieving the platform's long term healthy and sustainable development. Although our company's overall user base and revenue growth were affected, we have also seen a gradual improvement in platforms ecosystem. Since the beginning of this year, we have continued to strengthen the retention of core paying users to maintain the stability of paying users and overall revenue. In the 4th quarter, we will reduce some platform wide operating activities. And given the current macro environment, we expect the scale of our paying users and revenue from the virtual gifting business to experience a quarter over quarter decrease.

Speaker 2

At the same time, we are working to make new breakthroughs in our innovative businesses. Thank you. Next question please.

Operator

Our next question comes from Brian Gong with Citi. Please go ahead.

Speaker 1

Thanks management for taking my question. This is Katrina from Citi asking on behalf of Brian Gao. Can management share with us the internal regulation policies and the related impact to live streamers? Thank you.

Speaker 3

Thank you for your question. In our ongoing commitment to enhance compliance and regulatory operations, we have implemented various mirrors to fortify platform management and manage user conduct. During the quarter, we clamped down on noncompliant activities across our platform, addressing under the table dealings in game props and other items and combating cyber such as cyber violence and online rumors. We successfully pinpointed the specific streamers and the users engaged in non compliant behaviors by using advanced product analysis, tech powered identification and responsive compliant mechanisms. To uphold the integrity of our platform and ensure effective regulation, we issued warnings to streamers and the users engaging in questionable behaviors and administrative disciplinary actions against them.

Speaker 3

In the event of more severe violations, we will take more stringent measures including permanent bans. We are actively conducting day to day internal regulation across our platform, maintaining constant vigilance and monitoring, it's spreading improper conduct and cheating stricter disciplinary measures to address non compliant activities on the platform. We regularly disclose these activities on the Douyu website, Informing users about the mirrors, we take to manage a positive platform environment and repeatedly emphasizing the importance of complying with our platform's rules and regulations. We will also working with our users to jointly cultivate a positive online environment. We place a significant emphasis on user guidance and education, promoting our platforms rules and regulations to users through the Oyu Classroom initiative, enhance users' compliance awareness and further improving the cyber environment across our platform.

Speaker 3

Regarding our streamers, we have consistently educated and guided them on appropriate conduct and content within the platform. Elevating their awareness of compliance on the content front, we have ensured the sustainable delivery of high quality content to our users through continued content innovation and diversification. Additionally, our data tools empowered 3 months with insights into content production and operational analysis. This proactive approach has in turn giving streamers a better grasp of user needs and market trends, providing them with insights, the need to actively adjust their live streaming strategies, which has improved both live streaming quality and efficiency and boosted their interest in producing live streaming sessions. Till now, the company's operations remain normal.

Speaker 3

We believe our comprehensive platform management and the guidance measures are effective and our streamers have placed their trust and support in our platform. We remain committed to further enhancing compliance and fostering content innovation ensuring that our streamers operate within a healthier live streaming environment that fetters greater integrating. We are also dedicated to elevating the quality of our content services and the user experience. Thank you, please. Next question.

Operator

Our next question comes from Lei Zhang with Bank of America. Please go ahead. Can you give us some updates on your margin spend? Any room we can optimize in the OpEx? Additionally, any color on the cash flow statement?

Operator

Thank you.

Speaker 2

Thank you for questions. As to the profitability, in fulfilling our commitment to long term sustainable growth, we continue to adjust our live streaming business. Here, we have successfully elevated company's overall operating efficiency by optimizing costs and emphasizing ROI. Navigating today's complex macro dynamics, we have made significant strides in our refined operations, achieving growth in net income and adjusted net income for 3 quarters in a row. Let me walk you through how we've improved our operating efficiency, mainly in 2 aspects.

Speaker 2

Regarding our cost of revenues, we optimized the cost of our traditional business to counterbalance increased copyright costs and the cost of our innovative business, effectively keeping our overall cost fairly stable. The largest component of our cost structure is revenue share fees. This remained at a historically low level after several quarters of actively adjusting our revenue generating activities. Furthermore, we have significantly optimized our content costs, which mainly include streamer compensation, copyright costs and the cost of our self produced content. We have taken steps in recent quarters to enhance efficiency and ROI of our self produced content on multiple fronts, achieving favorable outcomes.

Speaker 2

In the Q3, we assessed our copyright costs and the cost of our self produced content, enabling us to better align the number of tournaments and self produced programs. With these insights, we were able to strategically consolidate a lineup of complementary premium content offerings while achieving a well balanced overall cost structure. Additionally, we strengthened performance driven assessments of streamers and optimized their compensation metrics, resulting in a sequential reduction in streamer compensation expenses. For operating expenses, we effectively optimized our expenses by implementing measures such as cutting back on channel related user acquisition expenses and refining our organizational structure. While Q3 operating expenses increased slightly quarter over quarter, this was largely due to one time expenses related to workforce optimization.

Speaker 2

With our streamlined team, we have a much firmer grasp of our overall expenses, which we expect to be more manageable

Speaker 3

in the future.

Speaker 2

In summary, amid a changing macroeconomic environment, our persistent focus on cost and expense control will stabilize the company's overall financial. Going forward, we will increase our focus on identifying and expanding innovative businesses based on collaborative initiatives with game developers. These coordinated efforts are designed to further diversify and empower our commercialization capability with the ultimate goal of fostering long term sustainable profitability and development across our platform. As to the cash flows, in terms of adjusted net income, we have achieved 3 consecutive quarters of profitability. These outstanding results not only underscore our effective cost controls, which we can see in our continuously narrowing operating losses, but also highlight company's productive approach to asset management.

Speaker 2

For 9 months ended September 30, 2023, our net cash outflow from operating activities was RMB31 1,000,000. A seasonal low in operating cash flow typically comes in the Q1 as we pay employee year end bonuses at the beginning of the year. In the 2nd and third quarters of this year, our operating cash flow turned positive. Additionally, in 2023, the company has not and will not engage in any significant financing or investment activities outside of cash management. Thank you.

Speaker 2

Next question please.

Operator

Our next question comes from Rafael Chen with COCI Research. Please go ahead.

Speaker 2

Thanks management team for taking my question. My question is about users. Firstly, could management elaborate more about the MAUs in this quarter? Secondly, could we have some color on the 4th quarter MAU guidance, especially with the help of Legal Flexions World Championship? Thank you.

Speaker 3

Thank you for your question. Soyuz Mobile MAU performed well in the Q3. As mentioned in our prepared remarks, thanks to the platform's high quality content. Our approach to growth has always been content driven. This trend rate paid off during the summer season.

Speaker 3

Firstly, during the summer peak season, we broadcasted the finals of several official summer tournaments and strengthened our investment in derivative content based on official tournament content, such as co streamed live commentary by streamers and approach to game review programs. Derivative content is popular among users in larger scale official tournaments such as LPL and KPL. The interactions between streamers and users were more frequent, attracting more new users. Next, the comprehensive programs we launched based on new games and the introduction of gamer benefits in collaboration with game developers have attracted new users and integrate the existing existing ones. For example, as mentioned earlier, the premier PGC variety show featuring Edge Party reached the record high MAU in the game segments during its broadcaster in July.

Speaker 3

And the number of viewing hours also doubled compared with the typical daily average. Additionally, during the KPI summer tournament, we collaborated with game developers to launch a 2 month long benefit activity in the On Our Game segment, including game top up, customized special effects, which also drew in more player participation. With the conclusion of summer tournaments, the MAU in the late part of the Q3 began to wind down. In general, there are fewer official events in the Q4. Although the LOL World Championship tournaments are held in the Q4, the schedule is relatively shorter.

Speaker 3

At the same time, there are more holidays in the 4th quarter. And users typically engage in more offline activities during this time as all of these factors can weigh on MAU levels in the Q4. We will maintain a prudent marketing strategy and stick to our content driven strategies for user retention and growth to mitigate

Speaker 2

the adverse

Speaker 3

seasonal effect on MAU. Our content driven strategy to facilitate platform growth has remained unchanged for a while now. By continuously investing in high quality content learning about the user content demands, upgrading content recommendation algorithm, providing technical support and updating relevant project features. We have stabilized the user base and gradually attracted the new users. Therefore, despite the complex market environment, our core user data remains stable overall.

Speaker 3

We are also actively exploring new models to promote a second phase of rapid growth in user scale on our platform. Thank you. Operator, please.

Operator

Thank you.

Powered by Quartr

Key Takeaways

  • Douyu has set up an interim management committee amid an investigation of its founder and is reinforcing internal supervision to ensure regulatory compliance and platform integrity.
  • In Q3 2023, Douyu delivered 51.7 million mobile MAUs (up QoQ, down 9.5% YoY), 3.9 million paying users and an adjusted net profit of RMB 71.9 million on revenues of RMB 1.36 billion.
  • A content-driven strategy featuring over 50 official esports events, self-produced tournaments and new-game broadcasts (e.g., Aggie Party, Wallet Ranch, Lost Art) spurred user engagement and re-engagement.
  • Monetization shifted toward user quality over quantity, trimming low-ROI marketing spend, introducing modestly priced products and driving membership growth with steadily rising renewal rates.
  • Disciplined cost management—lower revenue-sharing fees, optimized streamer compensation and reduced marketing and R&D expenses—has delivered three consecutive quarters of improved adjusted profitability.
AI Generated. May Contain Errors.
Earnings Conference Call
DouYu International Q3 2023
00:00 / 00:00